Income Tax for Beginners

Firstly, are you purported to pay Earnings Tax?

The reply depends upon the yr. On your revenue for the yr 2011-12 (1st April, 2011 to thirty first March, 2012), you’ll have to pay tax if

 

  • you’re a resident man with a taxable revenue of greater than Rs. 1,80,00
  • you’re a resident lady with a taxable revenue of greater than Rs. 1,90,000
  • you’re a resident senior citizen (age 60+) with a taxable revenue of greater than Rs. 2,50,00
  • you’re a resident very senior citizen (age 80+) with a taxable revenue of greater than Rs. 5,00,000

 

How a lot tax am I purported to pay?

You should have heard of ‘Earnings Tax Slabs’. For a resident male, the slabs for the yr 2011-12 are

Earnings Slab – 0 to 1,80,000
Charge – 0%

Earnings Slab – 1,80,001 to five,00,000
Charge – 10%

Earnings Slab – 5,00,001 to eight,00,000
Charge – 20%

Earnings Slab – above 8,00,000
Charge – 30%

Which means in case your revenue is lower than 1,80,000 you do not have to pay tax.

In case your revenue is, say, Rs. 2,30,000, you need to pay at 10% on the quantity by which it exceeds Rs. 1,80,000. On this case your tax legal responsibility could be (2,30,000 – 1,80,000) *.10

And in case your revenue is, say, Rs. 6,00,000, you need to pay tax on Rs. 3,20,000 ( 5,00,000 – 1,80,000 ) at 10%, and on Rs. 1,00,000 ( 6,00,000 – 5,00,000 ) at 20%.

So, which means yearly I’ve to go to the Earnings Tax Division and pay it?

Most likely, no. To make issues easy in your finish, the Division makes your employer do the identical. Your employer will deduct it out of your wage and pay it for you. That is referred to as TDS – Tax Deducted at Supply.

What is that this Kind 16?

How are you aware in case your employer is paying your tax on time? and what’s the quantity?

Your employer gives you a Kind 16 on the finish of a yr. This manner 16 has particulars in regards to the wage he has paid to you, the tax he has deducted on it, and paid to the Earnings Tax Division.

What’s Advance Tax / Self-Evaluation Tax?

Your employer will deduct tax in your wage revenue and pay it to the Earnings Tax Division, however what when you’ve got revenue from different sources as effectively?

Say, you bought a bit of land and made a good revenue on it. You now need to pay tax on this revenue. Sadly, your employer will not pay it. You’ll have to do it.

Take one other case. Your employer didn’t deduct tax in your wage. He’ll face penalties from the Earnings Tax Division, however what about you? You’ll now you need to pay it to the Earnings Tax Division instantly. It is a uncommon case.

That is referred to as Advance Tax / Self-Evaluation Tax

Is there any distinction between the above two?

Sure.

Should you pay it in the course of the yr, i.e., between 1st April, 2011 and thirty first March, 2012 (for 2011-12) it’s referred to as Advance Tax.

If, whereas getting ready your tax return, you understand that you simply nonetheless need to pay tax, and pay it so, it’s referred to as Self-Evaluation Tax. Thus Self-Evaluation Tax is paid after thirty first March, 2012.

What are revenue tax deductions?

Deductions are sure tax advantages you may be allowed to avail. In case your revenue is Rs. 4,00,000, and you might be allowed to deductions of Rs. 1,00,000, you’ll solely need to pay tax on Rs. 3,00,000 on the slab charges.

There are quite a few deductions. Instance:

 

  • Premium paid on a Life Insurance coverage Coverage
  • Housing Mortgage Repaid
  • Quantity deposited in a PPF (Public Provident Fund) Account
  • Sure Mutual Funds bought
  • ULIPs bought

 

Okay, so my employer pays tax on my behalf. So, my job is completed? I haven’t got to do something, proper?

Not likely. It’s a must to file an revenue tax return with the Earnings Tax Division. A return is nothing however a kind that states the revenue you’ve got earned all year long, the tax you had been purported to pay on, that tax you truly paid, the advantages you availed, and so on…

You’ll be able to method an accountant to assist along with your return, or higher nonetheless, do it your self utilizing a personal¬†on-line revenue tax efiling¬†portal.

Earnings Tax Return efiling may be finished by means of a neighborhood accountant or on-line revenue tax efiling portals

go to andorra income tax for particulars

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